867.51/3–2946: Telegram

The Ambassador in Turkey (Wilson) to the Secretary of State

confidential

380. ReDeptel 202, March 7. Information Turkish loan conversations much appreciated. If total credit for 1946 and 1947 may not exceed 25 million dollars (less 7 million railway shop credit) and predicted short terms apply they will be severe shock to Turks.

I fully appreciate heavy demands on Eximbank that many factors must be weighed in connection with all applications and possibility Turkey’s ultimate recourse to International Bank. But before final decision on Turkish loan policy Department may wish give appropriate consideration to following:

1.
Position Turkey vis-à-vis Russia remains critical. Relatively unfavorable loan treatment of Turkey now likely to be misinterpreted [Page 904]especially in view recent public announcement that billion dollar loan to Russia has been recommended by National Advisory Council.29
2.
Turkey feels that its wartime policy was definitely beneficial to United Nations of which it is one, that it is to cooperate in Bretton Woods and UNRRA and although not devastated by enemy its financial needs for certain economic readjustments are vital. Regardless of conditions prompting our action, failure to treat Turkey more favorable than, for example, Finland, close Nazi associate during war, will not be understood by Turks.
3.
There is some urgency with regard to projects requiring early credits, notably those in fields of agriculture, minerals development, transportation and communications, all affecting widely general economy of true [the] country.
4.
Foreign exchange and gold are subject to numerous obligations. Responsible official Central Bank states confidentially that total dollar exchange on March 13 was only 17 million dollars of which 3 million held behalf National Bank Yugoslavia. Much of gold holdings in excess of those normally required for currency backing and governmental obligations are regarded by Turks as essential to maintain highly liquid financial position while Russian situation remains threatening and substantial holdings are required in view inherent weakness domestic eco position, gold also required Bretton Woods fund and Interbank obligations.

Wilson
  1. For statement by the National Advisory Council on International Monetary and Financial Problems, February 21, 1946, on the foreign loan policy of the United States, transmitted to Congress by President Truman on March 1, see Department of State Bulletin, March 10, 1946, pp. 380 and 381. This did not mention the Soviet Union. See also note from the Secretary of State to the Chargé of the Soviet Union, February 21, vol. vi, p. 828. This stated that the Department considered such a credit among a number of outstanding economic questions.